Former Wesleyan University CIO Sued by CT Attorney General

(August 23, 2010) — Attorney General Richard Blumenthal is suing Wesleyan University’s former Chief Investment Officer Thomas Kannam, who was once one of Wesleyan University‘s most highly paid employees, and three private companies for allegedly mishandling university endowment assets for personal trips and other expenses.

According to a release filed Monday by Attorney General Blumenthal, the lawsuit, which has been served but not yet filed in court, claims that Kannam failed to disclose his ties to multiple investment groups, including Belstar Group, LLC, Vietnam Capital Partners, LLC and Advanced Device Technology, Inc., while serving as Wesleyan’s chief investment officer.

“Wesleyan staff and assets were allegedly treated as personal fiefdom — abused and misused for private gain,” Blumenthal said in a statement. “Our lawsuit seeks to recover every dollar diverted from Wesleyan University’s charitable assets by its former investment chief. This misuse of Wesleyan’s endowment resources deprived all Wesleyan students and staff of potential resources.” The attorney general added that Wesleyan’s endowment strictly promotes education and charity as opposed to any private profit and personal trips. “So-called golf outings of the century and new job-seeking trips abroad illegally drained school resources,” he asserted. “My office will fight to recover charitable resources and restore public trust.”

Kannam, who served as Wesleyan’s director of investments from December 1998 through 2005, when he was promoted to serve as chief investment officer, allegedly used Wesleyan employees and university resources to offer research and other services to private firms, which are also named as defendants in the suit. As a condition of employment, Kannam was prohibited from serving in any other positions or on boards, compensatory or otherwise, without permission from the university president, yet Kannam failed to seek consent or disclose his affiliations and lucrative outside ventures that persisted throughout his work at Wesleyan.

Blumenthal’s office estimates that Kannam — who was terminated in October 2009 — misused, at a minimum, tens of thousands of dollars in university assets.

The suit against Kannam by Blumenthal follows a suit by Wesleyan on November 24, 2009, in Connecticut Superior Court. The university claimed Kannam “defrauded the university of thousands of dollars” and “engaged in outside employment in breach of his duty of loyalty, his employment agreement and the university’s conflict of interest policy.” Blumenthal will support Wesleyan’s suit against Kannam. The Middletown, Connecticut-based university fired him Kannam in October.

In June, Wesleyan filled Kannam’s position, naming Anne Martin of Yale University’s fund as its new chief investment officer to oversee Wesleyan’s fund, which was valued at $532 million as of March 31.

Read ai5000’s cover story on Thomas Kannam in the March / April issue.